2009-06-11_Minutes--Procès-verbal
June 11, 2009
37-2009
Minutes of the Portion of the Committee of the Whole Meeting Open to the Public
June 11, 2009, 4:00 p.m.
Council Chamber City Hall.
Present:
Mayor Court,
Deputy Mayor Chase and Councillors Court, Higgins, McGuire, Mott, Sullivan, and Titus
- and -
T. Totten, City Manager; P. Woods, Deputy City Manager; J. Nugent, City Solicitor; G.
Yeomans, Commissioner of Finance and Treasurer; P. Groody, Commissioner of
Municipal Operations; C. Graham, Comptroller; E. Gormley, Common Clerk and K.
Tibbits, Administrative Assistant.
1. Meeting Called To Order
The Mayor called the Committee of The Whole meeting to order.
1.1 Morneau Sobeco Presentation: Financial Advisory Services to the Employee
Pension Plan – Meeting #3
Referring to a submitted presentation, Mr. Mel Bartlett began by stating the objectives of the
meeting and requested assurance from Council that they are delivering the target that
Council requires.
Mr. Bartlett discussed actuarial valuations and stated that a valuation is not the real cost of a
pension plan and described it as a yardstick that measures whether there are sufficient
funds available to ensure that the promised funds to beneficiaries are available upon
retirement. He stated that the real cost of the pension plan is determined by how much is
paid out to the beneficiaries. He addressed the last valuation and stated that the most
dramatic influence to the pension plan resulted from the change in the actuarial evaluation
from 8% to 6.75%. He stated that a change to the mortality rate of active members also
played a part in the change, although not as significant. He stated that it is expected that
the Superintendant of Pensions is not likely to accept an actuarial valuation over 6.5% at the
next valuation.
Mr. Jeff Penner addressed Council stating that the City of Saint John pension plan is very
dependent on investment returns to the extent that approximately 80% of future benefits are
expected to be paid from investment return and 20% from actual cash contributions. He
stated that it can be difficult to manage a pension plan with this degree of uncertainty and
volatility in the marketplace.
On motion of Councillor Titus
Seconded by Councillor McGuire
RESOLVED that Council is committed, in principal, to the idea of 50-50 cost sharing of
the pension plan with plan members.
Question being taken, the motion was carried.
June 11, 2009
38-2009
Mr. Penner noted that the way the City decides to allocate the risk exposure for the concept
of a 50-50 cost sharing of the pension plan is a major decision point.
Mr. Penner proposed that Council commit to an approximate level of funding at 20% to 22%
of payroll which equates to approximately an additional $2,500,000 per year. He also stated
that the pension plan is a mature plan with approximately 50% of the liabilities attributed to
retirees. He proposed that the retirees become part of the solution by suggesting that
indexing be suspended until such time that the plan is in a funded position.
Mr. Bartlett stated that if retirees are not involved, the active members will be required to
carry the entire share of the proposed 50-50 cost sharing approach which would be
especially difficult for the active group. He also stated that if Council suspended indexing
unilaterally, it would most likely be challenged in court. He recognized that employee cost
sharing is based on a formula of money being contributed to the plan as well as a reduction
of benefits being taken from the plan.
Mr. Bartlett cautioned against “benefit cliffs” suggesting that caution be exercised so that
people do not receive very different benefit levels which could influence people to retire
early. He suggested the implementation of a core plan and a target plan; the core plan
being a basic level of benefits when the plan is struggling with the intent of providing
benefits at the target plan level when the plan is solvent.
Councillor Sullivan entered the meeting.
On motion of Councillor Titus
Seconded by Councillor McGuire
RESOLVED that Council reconvene in a Closed Committee of the Whole
meeting to discuss a personnel issue, following this open Committee of the Whole meeting.
Question being taken, the motion was carried.
On motion of Deputy Mayor Chase
Seconded by Councillor Titus
RESOLVED that Morneau Sobeco be permitted to continue with the
presentation.
Question being taken, the motion was carried.
It was suggested by Council that the next meeting with Morneau Sobeco begin with a
discussion of the summary of decision points. Mr. Bartlett stated that he would provide
additional analysis on the idea of a target plan versus a core plan.
Council suggested that Councillors Farren, Killen, Snook and Sullivan be provided the
opportunity to meet with Morneau Sobeco prior to the next scheduled meeting to be brought
up to date with the information presented, preferably the same date as the next scheduled
meeting. The Common Clerk was asked to confirm a date and time for the next meeting
with Morneau Sobeco.
June 11, 2009
39-2009
2. Adjournment
The Mayor declared the open Committee of the Whole meeting adjourned at 6:15
p.m. and stated that the closed session of Committee of the Whole will begin
th
immediately in the 8 Floor Boardroom.
On motion of Councillor Titus
Seconded by Councillor McGuire
RESOLVED that the public be excluded from the meeting for the duration
of the discussion on the following matter(s): Committee of the Whole 1.0 Legal Session
10.2(4)(f)
Question being taken, the motion was carried.
Common Clerk
Record Pursuant to Section 10.2(4)
The meeting of the Committee of the Whole of Common Council held on June 11, 2009
was closed to the public pursuant to Section 10.2(4) of the Municipalities Act during the
10.2(4)(f)
Committee's discussion of the following matter(s): 1.0 Legal Session
Common Clerk